The fact that Tesco is trialling Starbucks concessions in some of its stores is testament to the power of branded coffee. Tesco does everything from basic coffee to its Finest range yet it views Starbucks as the brand that will bring customers in.
Starbucks may not be available to you but there are plenty of coffee brands that are, and they are definitely worth thinking about.
Leon Mills, brand manager at Tchibo, puts it succinctly when he says: "Gone are the days when an instant cup of coffee was okay for your forecourt grab-and-go customer. British consumers are becoming much more particular about their coffee and will drive out of their way to get it."
Tchibo Coffee International describes itself as a one-stop-shop when it comes to out-of-home coffee. The company not only offers a comprehensive selection of coffee, but also provides a range of machines including traditional semi-automatic and bean-to-cup.
Its latest launch, in December, was of the new Fresco bean-to-cup machine which includes an under-cabinet fridge for a reduced footprint and an easy cleaning system.
Peter Simpkins, marketing director at Tchibo, comments: "We are very pleased with Fresco, not only does it serve fresh coffee with fresh milk, it is compact, fast and easy to use. We believe it will make a real impact in the grab-and-go market."
Tchibo’s range of coffee beans includes a Gourmet and Classic bean, fairtrade Vista as well as the exclusive Café Crème.
== GET THE PRICE RIGHT ==
When it comes to selling coffee the price is important and you might be surprised when you learn that Jason McNally, managing director of Simply Coffee, reckons that price should be just £1 a cup.
"We come across retailers who have had bad experiences with coffee and part of the reason is usually because they are trying to sell it at too high a price point," says McNally.
"Yes coffee shops on the high street might be selling their drinks for much more than £1, but you are not offering your customers the same as them. On the high street, consumers can sit down and relax, in forecourts they buy their coffee and leave."
However that’s not to say that Simply Coffee doesn’t deliver a decent cup. McNally says it’s a high-quality bean-to-cup coffee sourced from the Rainforest Alliance.
"We use just the one bean - the Rainforest Espresso - and offer consumers five coffees: black, white, espresso, cappuccino and latte. We also offer standard tea plus four specialities: green, earl grey, chamomile, fruit; as well as our Simply chocolate."
There is just one cup size - 12oz - to keep everything as simple as possible.
McNally says 90% of Simply Coffee sales are at £1 but the company doesn’t enforce the price point.
However he does have a story to illustrate that it works: "We have three Spar customers in central London, in the Piccadilly and Haymarket area. The first retailer sells our coffee at £1.50 per cup and sells about 50 cups a day. The second sells at £1.25 and sells 100 cups a day while the third sells coffee at £1 a cup and sells 400 a day. All I’ll say is what would you prefer? Cash margin in the till or a higher percentage profit? I reckon it’s the cash margin through the till that counts."
He says you can offer a 12oz cappuccino for £1 and make a 70% margin which is why, in many forecourts, hot coffee is by far the most profitable item.
Retailers interested in getting Simply Coffee in their stores have to contact the company first to arrange a site visit.
"We make our money from selling the coffee so we are looking for sites with good transient traffic. If a site won’t sell it, we will tell them straight away."
He reckons a store selling just 20 cups a day would make £5,000 net profit a year.
"We offer five different solutions to suit different pockets and space. We have to take into account things like plumbing and power issues."
Equipment is available on free loan or to rent or lease. "To be honest we are very flexible and the finance will be the least of a retailers’ problems because whatever problem there is we can overcome it. We even provide the retailer with free stock to the value of the purchase price of the solution, making it absolutely certain that they will be in profit almost straight away."
Simply Coffee looks after its equipment with a three-year service package which covers parts and labour. The company has 70 engineers nationwide who will respond to calls within 24 hours but McNally says most are dealt with within eight hours.
Once the coffee is in, point-of-sale material is used to drive customers to the machine.
McNally says that some of Simply Coffee’s customers are generating in excess of £250,000 profit, from less than 1sq m of sales area.
The new Simply Coffee Café in-store unit requires just 1sq m of floor space (1,225mm wide x 1,900mm high x 700mm deep). The unit comprises a Swiss Franke coffee system serving up to 120 cups per hour.
== SIMPLY AT SOMERFIELD ==
Simply Coffee now supplies more than 550 sites across the UK. Last year, it was chosen by Somerfield to provide fresh bean-to-cup drinks. The company was first invited to carry out a trial at 20 Somerfield sites last April and has since signed a contract to provide 100 units throughout the UK.
The company’s head of formats, Steve Tremlett, says: "I discovered Simply Coffee at the Convenience Retailing Show and invited them onto our forecourts where the product has been very well received.
"For £1 it’s an excellent product - streets ahead of instant coffee and we have been very pleased and impressed by the company’s proactive management in getting their product out into our network."
Another coffee-to-go solution provider is Coffee Nation, which launched in 2000 with Welcome Break and Texaco as its first distribution partners. Today the brand is present in 560 retail, travel and leisure outlets across the country.
Director Carl Jackson reckons his company’s convenience gourmet coffee offering has successfully bridged the gap between manned coffee bar chains and traditional coffee vending.
"Research has shown that the demand for high-quality coffee in non-traditional locations is continuing to rise. Reflecting this, the 2007 Mintel Vending report reveals that coffee vending has risen 12% since 2002 from £604m to £675m."
Coffee Nation is currently available within 500 forecourt sites across the UK, including Esso, Somerfield, Tesco, Malthurst, Pace, Sainsbury’s as well as motorway chains Welcome Break and Moto and a number of independent operators.
Jackson says his product is the top performing SKU: "Customer research has proven that Coffee Nation not only drives loyalty but also increases the average spend."
He adds that his company is "totally fixated on the quality of product" and so works with world-class baristas and technologists in order to deliver consistently good coffee.
Every one of its machines is connected to the internet and is monitored by a dedicated helpline. Jackson reckons Coffee Nation’s own service and maintenance function is a core competitive advantage. When machine faults are recorded, service engineers are on site within a matter of hours. The company also employs ’brand guardians’ to ensure its strict standards of hygiene, quality and freshness are met.
However self-serve machines are not the only option. The Co-op forecourt at Alnwick in Northumberland is on the busy A1 and its coffee shop serves as a great resting place for drivers. The shop switched to Country Choice’s Bake ’n’ Bite Barista coffee concept about eight months ago.
Co-operative Group regional manager, petrol division, Andrew Westman, comments: "We wanted the Barista for the quality of the coffee, which is just like you’d get in high street coffee shops - and for the in-store theatre. So far sales are going really well.
"We offer a big range of drinks, all at around £2 using only fairtrade products and probably sell around 100 cups a day. Early mornings and lunchtimes are our busiest times. Lots of people sit in and drink but we do offer takeaways too.
"The sit-down-and-drink concept might not work in all forecourts but it definitely works for us here on a busy main road. And, as the weather improves and we see more coach parties coming in, we expect sales to really take off."
=== Coffee and doughnuts ===
There’s nothing quite like a coffee and a doughnut - the ultimate ’elevenses’ snack, which is why Bake ’n’ Bite is launching a Real Coffee & Doughnut concept.
First the coffee. It’s a bean-to-cup coffee with the beans in full view so customers know exactly what they are getting. The coffee itself is fairtrade Arabica but also available is Tetley tea and Nestlé Aero hot chocolate. The machine is easy to operate, delivering fresh coffee in less than 45 seconds. Drinks are made with chilled fresh milk.
The compact coffee brewer requires no plumbing, drainage or wiring. Retailers who buy the machine for £2,700 get £427-worth of items free including a milk cooler, hot water boiler, cup and lid dispenser, condiments holder and point-of-sale material. The machine is also available to lease.
Then there are the doughnuts, which add value to the coffee purchase and enable retailers to offer a coffee and doughnut deal.
Twelve varieties of doughnut are available from simply sugared ones to ones filled with chocolate or vanilla crème. They are all frozen; retailers simply thaw and serve and once thawed they have a 24-hour shelf life.
The whole concept is self-serve which eliminates expensive labour costs.
Bake ’n’ Bite’s Coffee & Doughnut concept will be on display at the Convenience Retailing Show, at the Birmingham NEC from April 6-9.
=== Retailer view: Susie Hawkins, simon smith group ===
"We have hot drinks in three of our sites. We have a Tchibo machine in one, which is bean-to-cup and uses powdered milk. We bought it two and a half years ago when the first bean-to-cup with fresh milk machines were still very expensive - £5-6,000. We also have two Franke Flair machines, both of which are bean-to-cup with fresh milk. We have Lavazza coffee in one and fairtrade in the other. We sell equal amounts from all three machines; because they are not trading head to head, the powdered versus fresh milk is not a problem.
"All the sites sell coffee for the same price - £1.29. We make margins of at least 70%.
"Coffee is definitely an extra sale - people see it and buy it on impulse. At our Barnwood site the machine was tucked away a bit but we have moved it so customers can see it as soon as they come through the door and that has boosted sales.
"Generally the machines are by the hot food counter as the products sell really well together.
"We do sell a lot of coffee which is why we bought the machines outright because we didn’t want to get involved in a profit share deal.
"We have recently been debating with Budgens about whether to go fully-serviced or not, and get someone to come in and fill the machines with beans and clean them but I think we can manage to keep doing this ourselves."
=== See coffee companies at CRS ===
Bake ’n’ Bite, Simply Coffee and Tchibo will all be exhibiting at the Convenience Retailing Show, which is being held at the Birmingham NEC from April 6-9.
Logo onto [http://www.cstoreshow.com] for more details
=== Driving sales ===
Forecourts really are an ideal place to be selling hot coffee, especially if they are near a motorway or main route. And that’s because a professor from Loughborough University reckons a strong cup of coffee is one of the best ways for drivers to combat tiredness.
In response to an AA survey that found that 63% of British motorists were not taking effective breaks when travelling long distances, Professor Horne, director of the university’s Sleep Research Centre, says: "The best way to combat driver tiredness on long journeys is to have a strong cup of coffee (it must be 120mg of caffeinated coffee, which is 1-2 cups dependent on size) or a functional energy drink followed by a 20-minute power nap. It is key that drivers realise the seriousness of this issue as one in 10 of all car accidents is the result of driver fatigue."
=== Fresh and easy from kenco ===
Kraft Foods has launched the Kenco FreshSeal hot drinks station. This comprises a Marco 5ltr boiler plus a Kenco FreshSeal cup stand with storage for 100 drinks and space for all ancillary products.
A starter pack, worth around £120 at recommended retail prices, is provided free of charge with all hot drinks stations. This includes 100 drinks, sip lids, sugar sticks, stirrers and point of sale material.
Dave McNulty, convenience director at Kraft Foods, says the machine is easy to operate via a push-button dispenser and requires minimal cleaning.
In addition, its compact size means even the smallest forecourt shop can offer quality, branded hot drinks.
The Kenco FreshSeal Hot Drinks station is available for £299 and there is a branded cup stand for a further £65.
Those retailers who already have hot water dispensing facilities can buy the cup stand on its own.